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NewYorkCountryLawyer writes "Assemblymen Jonathan Bing and Micah Kellner, along with a number of co-sponsors, have introduced proposed legislation in New York State which would grant a tax credit to individuals acting as volunteers who develop open source programs. The idea of the credit is to ensure that volunteer developers, who could not otherwise deduct their expenses because they are not part of a 'business,' should nevertheless be able to receive a tax benefit for their contribution. The credit would be for 20% of the expenses incurred, up to $200. The preamble to the bill notes that the New York State Assembly itself currently uses 'Open Source programs such as Mozilla for email, Firefox for web browsing, and WebCal for electronic calendars,' and that these programs have led to significant cost savings to taxpayers. The preamble also cited a 2006 report authored by John Irons and Carl Malamud from the Center for American Progress detailing how Open Source software enhances a broader dissemination of knowledge and ideas."

It's great because while you can generally deduct your expenses from your income, if you are contributing to free software code, by definition you are not making any money.

An alternative of course is to join a fair project [fairsoftware.net] instead (warning: shameless plug - you have been warned). Think of it like open source, except that if someone makes money with the resulting software , that person owes a fair share back to the developers.

$200 is too low. I want to be able to deduct my MacBook Pro. But hey, New York is l

New York was heavily dependent on wall street/banker money and expanded government spending during the subprime bubble.. That money dried up big time and they are one of the hardest hit states. There's no chance of any tax credit. In fact, you should hope they don't start taxing FREE software.

After all slashdotters joke about having to pay the "Microsoft Tax", just give the legislators half a chance to think about it...Then give MSFT half a chance to "educate" said legislators via campaign contributions.

I know it's Slashdot, but I'm assuming you're not from New York. Per the article's link, the bill was introduced on March 3rd, so if this gets passed by 2015 we'll be lucky. This is the same state that's rebuilding the World Trade Center and swears it'll be done in time for the 10th year anniversary - in 2011. Did we mention they started in 2002?

I think now is a good time to have some public discussion of what it will mean if big companies can essentially make money by making their code open. Would Sun have open sourced Java sooner if we were going to pay them to do it? Will it mean a healthier open source community? Will it encourage hardware vendors to go further for the Linux community than just giving us BLOBs?

if you are contributing to free software code, by definition you are not making any money.

How so? You can make it so that while your software is libre, that people have to purchase it to obtain it. Volunteering obviously means that you will not make money, but contributing in and of itself doesn't exclude this.

if you are contributing to free software code, by definition you are not making any money.

That's not necessarily true. You may not make money directly off the contribution, but the expenditures that go into developing the code that is contributed could be, in effect, a PR and/or R&D expenditure in pursuit of another business (e.g., writing software-related books, or selling consulting services related to the project to which you are contributing.) Heck, if it couldn't be part of a money-making business,

Working on OSS won't pay for a MacBook either. You just have to devote a small amount of time to paid freelancing. Then you can write off the entire cost of the MacBook and still have plenty of time to use it for OSS development.

$200 is too low. I want to be able to deduct my MacBook Pro. But hey, New York is leading the way. Anyone knows if this has a chance to pass?

You might be better off with the $200. IIRC, credits are direct reductions in your tax bill. $200 credit means that $200 comes off your bill. Deductions don't work that way. A deduction is a portion of income that is considered non-taxable. So you don't get that much off your taxes directly - you just don't pay taxes on that portion. So say your state taxes are 5% - your $2000 MacBook Pro would only yield $100 off of your tax bill if you were able to deduct it.

I read your post. And he has an excellent point. Tell me how you prevent me and ten friends from putting up "Hello, World" Versions 1 through 20 on Sourceforge to get the credit. I have a large, verifiable team, and I have a release history. Now gimme my money.

Truthfully - you'd probably get the tax credit and nobody would care. As long as the whole world isn't doing it, the government doesn't care too much if a few people game the system (as long as you're following the letter of the law, which technically you would be).

To do it otherwise would require more costs in oversight than they'd probably regain. Afterall, there are some projects that are completely valid and don't have large teams working on them. And where does someone draw the arbitrary line on what

Yeah, so I put up what I've got now for DIFL and PTG. I've now contributed to two OS projects. Disregard the fact that the code for those projects is sketchy, and nothing actually works yet; last I looked, Sourceforge had project classifications for that. Suddenly I can get about $200 back, provided I can generate expenses.

Don't mix the concepts.There are three relevant concepts1) That of the immensely knowledgeable Unix wizard, with a big beard (the Unix beard); positive connotation2) That of the socially inadequate geek-in-the-basement which sleeps in a bizarre and unhealthy (lack of) schedule, has a horribly unhealthy eating habit (eats junk food over the keyboard), and sometimes misses shower; has a negative connotation, specially if the geek devotes most of his time to something useless such as Star Trek fandom, instead

Force the projects to be GPL-licensed and only GPL licensed. That way it prevents companies opening an BSD-style licensed project to get tax cuts on the early development and then finishing it closed source.

Force the projects to be GPL-licensed and only GPL licensed. That way it prevents companies opening an BSD-style licensed project to get tax cuts on the early development and then finishing it closed source.

Companies don't get tax cuts, the contributors do. The companies can already deduct their expenditures as business expenses. And, if that was an issue, your proposal wouldn't help, since it wouldn't stop them from starting a GPL-licensed-with-copyright-assignment-required-to-contribute and then finishing

Presumably the same way they do tax credits for everything else: voodoo. I'm currently allowed to deduct "research expenses" up to a certain amount. How do they verify what expenses are "research" and which aren't? I don't know, but I'm guessing they'd frown if I tried to submit a receipt for a Jet Ski. Same thing here: as long as you throw something up on Sourceforge (even "Hello World" might count) and give them receipts for things vaguely computer related (new hard drive?) they won't care too much.

Instead, commission some FOSS or features added to FOSS you already use; the money directly supports useful development and the developer(s) involved, the taxpayer, and the entire world (well, that uses that software, directly or indirectly...)

How much do we miss, as individual developers, when compared to corporations who get R&D tax credits, etc?

Obviously anyone getting paid via a W-2 gets very, very screwed. But for those getting paid via 1099, what can they do to recoup their investments in development that may or may not ultimately prove commercially viable? Etc.

If you want to help open source, require that government software makes widespread use of open specifications.

Open specifications and open source are almost orthogonal; I would say you want government software to specifically use open source, and government-issued software standards (e.g., standard mandated data formats) to be open specifications.

Open Source doesn't imply Open Specification.Source Code is not a Specification.Source Code can be Officiated and written for such a Platform Particular Level that it is useless to anyone else without the Spec or the original programmer.

Hey if you have a Binary File and the Intel Assembly Manual you could disassemble any program in assembly and follow that code to see what it does and then do changes and make it better.

20 Megs of source to sift threw without specs is a hassle and potentially quite dangerous

I want government software, like all software, to be good. There will always be bad software. However, if an entrepreneur identifies a bad product, and the market in quest has a low cost of entry, you will find that the bad product will be replaced with a better product. Whether or not it is open source or closed source is irrelevant.

Too many people consider freedom to be a price. I consider freedom to be the opportunity to improve yourself and the

Let me clarify: I do not mean to say that it is essential that all government software should be open source, what I meant is that there open source is, all other things being equal, a positive thing in many areas of government, where the same advantage may not apply equally in the private sector (this is particularly true, for instance, in software where government sponsors the development, rem

This is effectively an open source government subsidy, albeit a small one.

Government subsidies generally are used to either (a) encourage a behavior (mortgate interest deducture designed to encourage home ownership, for example, though what it really does is raise home prices), or (b) create a claim to that subsidiesd, in hopes of exploiting it later, which is likely the case here.

IOW, "You could not have developed this code if the taxpayer did not subsidize it, therefore the taxpayer owns

All healthcare systems ration, either by you not having the cash to buy it, by your HMO deciding it is cheaper to let you die while they drag out the denials and appeals process, or when there are not enough doctors and you have to wait. When there are limited resources, and there always are, there has to be a way to ration them.

The VA has the best result per dollar spent of all healthcare systems in the US, far more goes to overhead in private systems.

If you don't have "connections" you wait forever, often longer than if you could have paid the tax dollars you did toward health care toward a private policy. I discovered this very quickly when I moved from Canada to the U.S.: my taxes went way down (as I was married at the time and owned a home, there being no mortgage interest deduction in Canada, or the option to file jointly (and the tax credit for a spouse was a token amount)), and the premium I paid for

Then, if those Americans don't like it, they should leave, watch that the door doesn't whack them on the ass when they do, and if they decide to return, stand in line behind all those that actually want to be here.

Some of us actually like it here, because, as imperfect as it is, we find it far better than the alternative that we left. I usually hear the most griping from those that are fat, lazy, spoiled, and think the world owes them a life.

IOW, "You could not have developed this code if the taxpayer did not subsidize it, therefore the taxpayer owns it, not you, and you now have to pay a $50/year tax to use it. Obviously, since you did not own it, you could not copyright it, and the GPL is null and void,

He supports universal healthcare, for example, but can not accept that it's general failure is due to a design and not implementation flaw.

Rather like talk of taxing the internet because DARPA funded it's original development?

You think the government doesn't tax the Internet? It taxes every ISP, router operator, and website owner for all profits they make on their business. That's about as close as you can get to "taxing the Internet" even in principle.

Taxing the internet would be collecting all the existing taxes on corporate profits (rather like the telcos get taxed), as well as a tax on the traffic volume, and/or end-point identification (Domain names or static IP address blocks), etc. Yes, domain names and static IP addresses cost money now, but they are not a direct source of revenue for the government. IOW, a new tax.

Another example: oil refineries are taxed on profits and gasoline is taxed at the pump sepa

IOW, "You could not have developed this code if the taxpayer did not subsidize it, therefore the taxpayer owns it, not you, and you now have to pay a $50/year tax to use it. Obviously, since you did not own it, you could not copyright it, and the GPL is null and void, except where we say otherwise.

Copyright is a federal institution in the United States, and states cannot nullify, adjust, reinterpret, or ignore it. Copyright is held by the author of the work unless they created it in the course of their official duties for a regular employer, per USC 17. Therefore, New York couldn't do this.

If you need further convincing, we will just apply the doctrine of eminent domain to own it."

I've never heard of eminent domain being used with intellectual property. How would it work? They aren't actually causing you any loss, so can they just take it for free? Can they say that they get an exclusiv

Copyright is a federal institution in the United States, and states cannot nullify, adjust, reinterpret, or ignore it. Copyright is held by the author of the work unless they created it in the course of their official duties for a regular employer, per USC 17. Therefore, New York couldn't do this.

Can you say, "We subsidized the work, so it was a 'Work For Hire'?" The state owns it.

I've never heard of eminent domain being used with intellectual property. How would it work? They aren't actually causing yo

Copyright is a federal institution in the United States, and states cannot nullify, adjust, reinterpret, or ignore it. Copyright is held by the author of the work unless they created it in the course of their official duties for a regular employer, per USC 17. Therefore, New York couldn't do this.

Can you say, "We subsidized the work, so it was a 'Work For Hire'?" The state owns it.

No. The relevant law is 17 USC 101 [cornell.edu]. The relevant definition is "a work prepared by an employee within the scope of his or her employment". Receiving a tax deduction from the government does not make you a government employee.

As for eminent domain, it's always possible that eminent domain could be invoked on any property that anyone holds. If it's possible to seize intellectual property by eminent domain, then I should think the government would be more interested in seizing proprietary software -- after

Geez. The government won't sue for use. They'll tax you on your own code, and prosecute for criminal income tax evasion if you don't pay.

Dunno about the U.S., but in Canada, while the police can't bust down your door just because they think you killed someone, they can certainly do so, and sieze all your assets and property, if they think you're guilty of tax evasion. I hear the IRS is about the same, though my dealings with them have been reasonable.

Dunno about the U.S., but in Canada, while the police can't bust down your door just because they think you killed someone, they can certainly do so, and sieze all your assets and property, if they think you're guilty of tax evasion.

They can do so in either case, if and only if they have a warrant. At least in the US, the police can't confiscate anything or enter your home without a warrant, with only quite narrow situational exceptions. I doubt it's much different in Canada, although you probably don't have the exclusionary rule [wikipedia.org].

Except, (a) Canada does not have as strong a constitution, (b) jurisdiction over tax matters is via a special tax court [wikipedia.org], and (c) the burder of proof based on a balance or probabilities is upon the taxpayer to establish their innocence. The burden to establish civil penalties is upon the state.

Basically, if the taxing body says you're guilty of tax evasion, you have to prove otherwise. And, generally your assets can be siezed, until you can prove your innocence, often depriving you of the means to afford ade

Sure it's a small number, but it's a beginning. What's important are the principles -- the recognition that open source (a) contributes to the growth of ideas, (b) makes our economy more efficient, (c) helps both industry and government improve the services they provide, and (d) should be encouraged.

It's a tax break for a hobby. There are lots of things out there which are noble and good, but which don't qualify for tax breaks because the business never makes a profit, or not enough over the long term to call it a true "business."

I applaud OSS developers, but this is a carve out for a special interest. It happens to be "our" special interest, but that doesn't make it any better. I'd rather see the government actually use OSS and buy support contracts than give a handout.

By the way, for those of you anxious to know the background of how an Assemblyman named Jonathan Bing got into this issue, I should mention that

(a) the guy with the idea behind this bill was "open government", "open access to court records", "open source", "open everything" activist Carl Malamud [americanprogress.org], who was most recently in the news when Congressmen and Senators started picking up his thread about making PACER -- i.e. court records -- free (as in beer); and

(b) the guy who helped usher this through, and put together the details, and get the Assemblymen to put their backs behind this, in the halls of government, is a very dynamic young geek and Slashdotter named Benjamin Kallos (like myself a Bronx High School of Science grad) who until recently was working for Assemblyman Bing but is now running for City Council [kallosforcouncil.com] in Manhattan.

(a) the guy with the idea behind this bill was "open government", "open access to court records", "open source", "open everything" activist Carl Malamud [americanprogress.org], who was most recently in the news when Congressmen and Senators started picking up his thread about making PACER -- i.e. court records -- free (as in beer); and

Keep the money out of it. The open source system is already working. Any additional legislation, no matter how well intended, has consequences. If nothing else, government officials have to spend their time administering that legislation. Only when the benefits outweigh the consequences should legislation be introduced.

This kind of legislation only has the potential to harm the open source movement.

Currently, the benefit of this extra legislation is a pittance, a mere $200. This is nothing more than a token gesture. It's intended as an extra incentive for individuals to contribute, but gives no real relief to any project large enough to make a difference.

So it has barely any benefit, and it has a chance to do a lot of harm.

The little harms: It can be abused too easily. There's very little way to keep proper track. The money would be diverted from other public benefit.
The big harms: 1) incentives have been shown to psychologically stifle altruistic endeavours and 2) possible large scale abuse later.

1) The incentive
This kind of incentive actually does a lot more harm than good. Barry Schwartz talks about it briefly in one of his TED talks [ted.com]. (at 10min 50sec).

"If you have a reason for doing something and I give you a second reason, it seems only logical that 2 reasons are better than one and you're more likely to do it. Right? Well, not always..." He gives an example of something I've heard about time and time again. If people are willing to do something based on principle for what they believe is right, they are less likely to do it if they are also offered an incentive of money. The introduction of the incentive switches the psychological focus from, 'How can I help?' to 'What can I get out of it?' Without the incentive we're willing to deal with difficulties for a community or a cause we think is right. With the incentive, we weigh the difficulties with what we're getting out of it.

2) Abuse
If legislation grabs hold in one place, that makes it easier for similar legislation to come about in other places. This can have a snowball effect until it gets rather large. So right now you'd have a few individuals abusing the system, but if more legislation gets passed and more money added, you'd get large corporations abusing the system. What happens when the the next OOXML (a product owned by a large company but passed off as being the same as any other OSS) comes into play? It'll just be another government kickback to be abused. Don't assume government legislation is going to be tech savvy as to what true FOSS is.

OSS is doing fine now. It's not broken. It doesn't need fixing. There is already legislation helping non-profit organizations. This kind of legislation does not provide any real benefit. It is too easy to abuse now and it psychologically harms the motivations of the OSS movement.

Let's leave the money in OSS to donations and deals with ordinary companies. Adding extra governmental layers of money is just a bad idea.

I have to disagree. I have little applets I have written specificly for me, but if I had a little tiny incentive, I might make them a little more suitable for public use. I know, I know, I sould be doing this anyway as a measure of "correctness" (writing apps that are more configurable, generally suited) and I shouldn't need a token gesture to get me to upload it to SourceForge, but that tiny ammount would make me think "I should be uploading this, therefore I should be coding more generally."

Governments and executive management needs to go on a economic diet. However like all diets, we go off of them for various reasons and go back to our "bad" ways.Government and executives need to reduce own personal expenses so they can live within income they get.

I'd rather see the government push to get the open source software used in schools and government offices as well as a push for these institutions to use open source formats which will help push people into using it and in the end that will be worth much more than a cheque for $200.

With all of the chatter about the merits and viability of the tax credit, I'm surprised at the lack of comment on the preamble. Regardless whether the proposed legislation makes it, as a resident of NYS, I'm really encouraged to hear that the Assembly "Gets It" when it comes to *using* OSS. That's not "proposed" -- they've already made OSS a significant part of how they get things done. This is a *huge* win in mindset, and will have positive effects (even indirect ones) beyond any small tax credit.

With all of the chatter about the merits and viability of the tax credit, I'm surprised at the lack of comment on the preamble. Regardless whether the proposed legislation makes it, as a resident of NYS, I'm really encouraged to hear that the Assembly "Gets It" when it comes to *using* OSS. That's not "proposed" -- they've already made OSS a significant part of how they get things done. This is a *huge* win in mindset, and will have positive effects (even indirect ones) beyond any small tax credit.

Excellent point, Outlaw. It demonstrates an understanding of some of the important contributions that are being made by open source.

Sure, people may be living by the fundamentals of capitalism (maximising their own gain) but I don't think the system was ever intended to include an all powerful thief who steals money and then redistributes it to some people arbitrarily, keeping a big chunk for himself as payment for his wonderful services.

So you're saying capitalist theory was developed without considering the existence of governments? Well that would explain why it feels so disconnected from reality sometimes. That'd be like me developing a plan for getting to work that doesn't account for terrain or solid objects in my way.

To the mod... perfectly on topic. Let me break it down slowly for you. We have various agencies offering tax breaks and increased spending to help the economy. The reality is that spending Trillions more than you bring in may help short-term. However, long term we have to work harder just to pay the debt we owe everyone.

Now, if Mr. Smith not receiving any benefit from the overspending, he rightly goes "Hey, it isn't right to put me into debt so you can benefit". But, throw him a bone, and suddenly he is content with the overspending and gladly puts the ring through his nose.

Fast forward a generation, and the bill catches up with us. We spend more time just to pay off old debts, and less for investing in the future. Countries who lent us the money have more to spend on capital projects. Soon we are a 2nd world country.

It is already happening. And seeing the collective orgasm over a $200 credit illustrates it beautifully.

Bottom line: tax cuts are nice. But you have to pay for them. Either now. Or later.

We have various agencies offering tax breaks and increased spending to help the economy. The reality is that spending Trillions more than you bring in may help short-term. However, long term we have to work harder just to pay the debt we owe everyone.

If, as you say, the tax breaks and increased spending actually do help, then, by definition, more wealth has been created than otherwise would have existed with which to pay off the debt. That's the whole theory behind accepting short-term and potentially very

Tax levels and credits in an ideal democracy represent how much the society values various things. Carbon taxes with open source credits mean they don't like C02 in the atmosphere but like Linux. So yes, taxes on the whole should be increased to curb foreign lending, but that doesn't take away from legitimate shifts in a value for something like open source programming.